Welcome to our Federal Budget Spotlight Series: Small Business Tax Changes – Investment and Cash Flow Opportunities
Supporting investment and business resilience
The 2026–27 Federal Budget includes a number of proposed measures aimed at supporting business investment and cash flow, particularly for small and medium-sized enterprises.
Two key measures include:
- A proposed permanent $20,000 instant asset write-off
- Proposed permanent 2-year loss carry back rules
Instant asset write-off – proposed permanent extension
From 1 July 2026, the Government proposes to make permanent the ability for eligible small businesses (turnover under $10 million) to:
- Immediately deduct assets costing less than $20,000
- Continue to depreciate higher-value assets under simplified pooling rules
Why this matters
If enacted, this measure may:
- Encourage investment in business assets
- Provide earlier tax deductions, improving cash flow timing
- Offer more certainty compared to previous temporary extensions
Loss carry back – proposed permanent measure
The Budget also proposes to allow eligible companies (turnover under $1 billion) to:
- Carry back tax losses for up to 2 years
- Offset those losses against previously taxed profits
- Potentially receive a refundable tax offset
Key benefit
This measure may help businesses manage income volatility, particularly where earnings fluctuate across years.
Strategic considerations
If implemented, businesses may wish to consider:
- Timing of asset purchases
The timing of capital expenditure may influence when deductions are realised.
- Cash flow planning
Loss carry back may provide access to earlier tax refunds, improving liquidity.
- Investment strategies
Greater certainty may support longer-term planning and reinvestment decisions.
Our perspective
These measures are intended to provide greater stability in the business tax system, supporting investment and resilience.
While benefits will vary depending on circumstances, businesses that plan proactively may be better positioned to align tax outcomes with broader commercial objectives.
Disclaimer
This article provides general information only and is based on the proposed measures announced in the 2026–27 Federal Budget. These measures are subject to legislation and may change. This content does not constitute tax, financial or legal advice. You should not act on this information without obtaining professional advice tailored to your circumstances.
